Posted on 04/05/2020 7:58:57 AM PDT by Kaslin
Speaking regarding the Coronavirus crisis, Governor Newsom of California stated: "We see this as an opportunity to reshape the way we do business and how we govern."
The Governor of California best first find himself an expert in miniaturization. California’s self-vaunted fiscal health has been a public charade for years and now with the Coronavirus will be fully exposed as nothing less than a Zombie nightmare. The size and scope of California’s governmental expenditures is not sustainable.
The governor best concern himself with the State of California’s wallet before trying to concern himself with reshaping how we govern.
U.S. News and World Report rated California 40th of the states in long term financial health. That was before Coronavirus. That was before CalPERS, California’s Public Employees’ Retirement System, lost $70 billion in its investments by the end of March. That was before the stock market crashed with the elimination of projected California income tax revenues from the exercise of stock options, before the loss of sales tax revenues for March and probably April, before the closing of thousands of small businesses and before the general loss of income tax revenues from individual taxpayers. And California was rated 40th before the State was hit with unexpected and dramatic unemployment compensation claims.
Over half of California’s income taxes have historically been paid by that very small percentage of taxpayers earning over $500,000 per year. While we properly worry far more about those who are ill or missing payroll checks, most of those paying 50 percent of California’s income taxes have lost significant portions of their net worth and will be paying significantly less taxes in the future. That golden goose is very far from as fat as it was thirty days ago.
While Governor Newsom is raising concerns about wealth inequality, he best worry about a State in financial trouble. That wealth inequality has not gone away, but it has compressed significantly in the last thirty days.
Governor Newsom was first to the party in terms of locking down a state to prevent a faster spread of the Coronavirus and for that he should be knighted. But that knighthood is time stamped. California is in fiscal crisis; he needs to develop and disseminate a fiscal plan.
The federal government can print money; neither states nor cities can print money. Emblazon that thought in your mind as it will guide you through the upcoming shortfalls in state/city revenues versus committed expenses.
As stated above, in California, the pension plan has lost about $70 billion and has little or no hope of earning its projected 7 percent annual return of about $30 billion in earnings on its investment portfolio in 2020. Therefore, all by its little self, Calpers has a 2020 issue of about $2500 per California resident. This ignores that Calpers was significantly underfunded before the Coronavirus. Those who are expecting to collect their pensions from Calpers are not easily going to accept a reduction in their current or future pension payments. This is regardless of whether those with private pensions have been severely hurt. This is regardless of the reality that the State has not yet had any significant layoffs as have private businesses.
It is not hard to guesstimate California’s budget projected tax revenues for 2020-2021 of a little over $150 billion being closer to $100 billion and unbudgeted additional costs from the Coronavirus being in the billions. Every penny of the $150 billion is allocated for expenditure: $76 billion is supposed to fund education, almost $50 billion to fund health and human services and almost $30 billion for “other stuff.” Some of that “other stuff” is essential. Nothing in that budget anticipated Calpers being another $100 billion underfunded.
California is staring at a financial nightmare. California is not alone. No state and no city can print money ------ Plans are needed, now.
And these high-earners tend to be people who actually produce output and jobs, like professionals, tech executives, and business owners. The multi-millionaires the Left likes to pretend to target pay very little income tax because they don't have earned income - and when they do, they know how to report it in Florida or Nevada rather than California.
Not having physical money will be a disaster. Everything will be fine with electronic cash up until it’s not. You can have millions in the system but.... Power goes out, you can’t buy. The server is down, you can’t buy. You complain about the wrong thing, you can’t buy. Every transaction would be recorded. Eat too much ice cream, you can’t buy because the health insurance board says so. Your car uses too much gas, you are shut off. No good will come of this.
Buy a printing press and issue Blue Backs.
Have you noticed we haven’t heard a peep out of Chicago? Wonder how they are going to handle the lack of income with all of the cushy jobs and retirements they used to buy votes with.
AHA!
This is why nasty Nazi Nancy's nephew Newsom keeps referring to California as "The Nation-State of California"!
Actually, it is perfectly LEGAL for American states, and any banks, and even private individuals to print their OWN money. One just cannot counterfeit United States currency. The PROBLEM would be getting people to ACCEPT California’s shakey currency.
“so that they could not buy or sell unless they had the mark, which is the name of the beast or the number of its name.”
Those of you outside will see this jackass soon. He is Pelosi’s nephew and WILL be running for the presidency. Everything he does is strong arm. He has referred to himself on more than one occasion as the Tsar. He seeks absolute power over everything.
Every corner of this country will.have to grapple with this.
With the shutdown of economic activity, sales tax revenue, state income tax revenue, and gas tax revenue everywhere, is cratering.
Can you imagine a trillion dollar bailout from Washington, to bail out all 50 states and numerous big cities? This could be on the horizon.
Yeah, what is it with Chicago? Detroit is in the news daily, almost hourly, but not a peep from Obama’s “village.”
Thus us news to Albany.
Folks should see NYS’s new budget...
If you want an idea of how Chicago is doing, spend some time at this link...
http://secondcitycop.blogspot.com/?m=1
I think Cuomo said something recently, about how he had a 7 billion dollar hole in his projected budget. There are huge financial impacts of everything happening due to this virus.
Next step is to get advance approval of your written opinions from the secretariat of truth
I predict that states will, to the extent possible, issue bonds to get the cash to balalnce their budgets.
How these bond issues are received in the financial marekts is another story. But it will be politically difficult to impose big tax increases. So the path of least resistance will.be to sell bonds, and kick the can down the road.
They can print money. They cannot mint coins.
Just sayin’.
Confusing headline. States are constitutionally forbidden from printing currency.
Well then, I guess they better find a way to cut spending. Of course that's NEVER discussed.
The rubber hits the road when you pay federal income tax. U.S. dollars only.
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